1. Chapter 2SectionMain Menu Knowledge is knowing a tomato is a fruit. Wisdom is knowing that and not putting it in a fruit salad. Mixed Economies

2. Chapter 2SectionMain Menu Popcorn Reading Key words: economic, economies, laissez faire, patent, expenditure, continuum Read Adam Smith pg. 33 Then read pg. 40 – 44

3. Chapter 2SectionMain Menu Market economies, with all their advantages, have certain drawbacks. The Rise of Mixed Economies Limits of Laissez Faire ____________ is the doctrine that government generally should not interfere in the marketplace. Governments create laws protecting property rights and enforcing contracts. They also encourage innovation through patent laws.

4. Chapter 2SectionMain Menu monetary flow physical flow monetary flow physical flow Circular Flow Diagram of a Market Economy Households Firms Product market Factor market Households pay firms for goods and services. Firms supply households with goods and services. Households supply firms with land, labor, and capital. Firms pay households for land, labor, and capital. The Free Market Economy In a free market economy, households and business firms use markets to exchange money and products. Households own the factors of production and consume goods and services.

5. Chapter 2SectionMain Menu monetary flow physical flow monetary flow physical flow Circular Flow Diagram of a Mixed Economy Households Firms Product market Factor market Government expenditures government- owned factors taxes government purchases Government’s Role in a Mixed Economy In a mixed economy, The ____________ purchases land, labor, and capital (___________________) from households in the ____________ market, and Purchases goods and services in the ___________ market.

6. Chapter 2SectionMain Menu Continuum of Mixed Economies Centrally plannedFree market Source: 1999 Index of Economic Freedom, Bryan T. Johnson, Kim R. Holmes, and Melanie Kirkpatrick Iran North Korea Cuba China RussiaGreecePeruUnited States South AfricaFranceUnited Kingdom BotswanaCanadaSingapore Hong Kong Comparing Mixed Economies An economic system that permits the conduct of business with minimal government intervention is called ________________. The degree of government involvement in the economy varies among nations.